Correlation Between United Rentals and MSAD Insurance
Can any of the company-specific risk be diversified away by investing in both United Rentals and MSAD Insurance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining United Rentals and MSAD Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Rentals and MSAD Insurance Group, you can compare the effects of market volatilities on United Rentals and MSAD Insurance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in United Rentals with a short position of MSAD Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Rentals and MSAD Insurance.
Diversification Opportunities for United Rentals and MSAD Insurance
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and MSAD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding United Rentals and MSAD Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD Insurance Group and United Rentals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on United Rentals are associated (or correlated) with MSAD Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD Insurance Group has no effect on the direction of United Rentals i.e., United Rentals and MSAD Insurance go up and down completely randomly.
Pair Corralation between United Rentals and MSAD Insurance
Considering the 90-day investment horizon United Rentals is expected to generate 3.23 times less return on investment than MSAD Insurance. But when comparing it to its historical volatility, United Rentals is 1.59 times less risky than MSAD Insurance. It trades about 0.07 of its potential returns per unit of risk. MSAD Insurance Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,791 in MSAD Insurance Group on February 23, 2024 and sell it today you would earn a total of 210.00 from holding MSAD Insurance Group or generate 11.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.65% |
Values | Daily Returns |
United Rentals vs. MSAD Insurance Group
Performance |
Timeline |
United Rentals |
MSAD Insurance Group |
United Rentals and MSAD Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Rentals and MSAD Insurance
The main advantage of trading using opposite United Rentals and MSAD Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Rentals position performs unexpectedly, MSAD Insurance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MSAD Insurance will offset losses from the drop in MSAD Insurance's long position.United Rentals vs. Ryder System | United Rentals vs. The Aarons | United Rentals vs. Alta Equipment Group | United Rentals vs. GATX Corporation |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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